People seemed to be more generous the first time Natalie became homeless, four years ago. Her dad had moved abroad with his partner and she had moved in with a boyfriend. They broke up in 2014, and she ended up on the street. In 2015, Natalie, who is 27 and grew up in north London, was given a place in a hostel, but she became homeless again this year after the council raised the rates and she fell behind on her rent.

Since becoming homeless again, Natalie has noticed that more and more people have apologised for not having change. “They seemed to have a lot more to give [back in 2014]. I was getting more in that summer than I did in the winter just gone,” Natalie says. “In the winter people tend to be a lot more generous anyway, because obviously they see you out and it's snowing and it's cold. But this time around – I've been homeless since December, and it's been a lot worse. It's been a lot, lot worse.”

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Across the UK, 300 cash machines close each month. Poorer rural areas, where machines were brought in to cushion the closure of branches, are being hit hardest. In 2006, 62 per cent of payments were made in cash. Today, only 40 per cent are, and by 2026 this is expected to be as low as 21 per cent. For people without a stable bed, who rely on the generosity of strangers, the disappearance of spare change is an urgent issue. Natalie — alongside 300,000 homeless people across Britain — has already started to feel the pinch.

As use of physical money continues to fall, where does this leave the homeless? Some Big Issue vendors have taken to sourcing their own card machines – readers like iZettle or Sum Up. But, says magazine vendor Martin, this has its own issues. “A few of the sellers have got card readers, but for that you need a bank account, and for a bank account you need an address and an ID. You also need a data connection and it’s very difficult to get a hotspot.” Back when he started, in 1998, he needed nothing but a name to begin selling. Now, that’s all changing. “It’s a dog-eat-dog world, nowadays.”

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Using card readers might actually backfire, given how the adoption of technology is widely regarded as out of character for the homeless. “Poverty is associated with a lack of technology,” says Brett Scott, a campaigner and expert on financial automation. “And that's partly what convinces people that someone's in need.” The presence of devices like card readers changes the psychological dynamic of how people think about homeless people, he says.

Even in virtually cashless China, homeless people who accept payments via QR code have been accused of “hanging out in popular tourist spots” and acting on behalf of scammers, who in turn skim payments while harvesting and selling WeChat IDs.

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Much as refugees are criticised in some quarters for having smartphones, so homeless people accepting cards run the risk of seeming devious. “I joke about how we should get card machines or something. I'd feel a bit weird,” Natalie says. “‘I do accept cards’ – I dunno how well that would go down.”

This emerging problem has not escaped the attention of innovators. In the UK, non-profit startup TAP London is working to find a foolproof way for people to give to the homeless without actually handing them cash — a practice that, TAP believes, fuels organised crime. Thirty digital payments points are about to be rolled out in windows across central London under a City Hall scheme. The money raised through small donations of £2 or £3 will then be redistributed among a coalition of 18 charities supported by the mayor.

TAP’s work is also moral. “Giving on the streets can do a huge disservice to homelessness, because often there's a lot of organised crime and other issues,” TAP's co-founder Katie Whitlock says. This belief is anecdotal, but the TAP initiative speaks of a persistent mistrust towards homeless people.

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TAP is only one of several companies trying to crack the cashlessness issue: Giving Streets is an app which integrates PayPal and blockchain technology via a QR reader, in the hopes of automating passing donations; Greater Change allows homeless people to take donations for specific savings, and only releases their value to the provider of that goal – like a landlord or a training service; Helping Heart is a jacket which lets people take donations to spend in select homeless shelters in the Netherlands.

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Marloes Nicholls, head of programmes at the Finance Innovation Lab, suggests these businesses are sometimes more concerned with assuaging guilt on the part of cash-poor givers than meeting the new needs of the homeless. “I so rarely hear the voice of homeless people,” she says. “We hear from the corporate voice.”

“It raises really important questions about how much we trust homeless people.”

Homeless people aren’t the only ones affected by a lack of cash. 2.7 million people in the UK rely on cash in their day-to-day lives, and these people tend to be on low incomes, elderly, or struggling with ill health. The race to do away with cash, then, fails “anybody who's informal and operating on a small scale,” says Scott.

“Banking the unbanked” – the quest to promote the financial inclusion of those without accounts – is the chief case made to refute concerns about those excluded by cashlessness. In some cases, there is no doubt that having a bank account would help people living in poverty. But access to a bank account, and the formal infrastructure it opens up, is often seen as an absolute good, weaving people on the fringes into the mainstream of society. It is not that simple.

“Even if marginalised people were able to access these institutions, they don't necessarily want to, you know — it doesn't necessarily work best for them. Not everyone likes to interact with large institutions. Not everybody feels it represents them,” Scott says.

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Homeless people, like others surviving in informal economies, get by through relying on more flexible networks of trust and exchange. “To an outside observer, who's used to formalised institutions, they'd be like, ‘That's chaos, it's dirty, it's unhygienic, it's informal, it's weird’. But if you're part of those networks they can work very well.”

Digital payments are presented as clean, safe and ‘frictionless’. But, Scott argues, this is a narrative manufactured by banks and payment processors: in 2015, Visa Europe unveiled a contactless payments campaign under the slogan “Everyday Britons are paying with Visa Contactless,” claiming ubiquitous digital payments were “safe, swift and easy for everyone in the UK everyday”. But what about cash is so dangerous, slow and difficult?

In fact, having worked with people on low incomes and dealing with high-cost credit issues, Nicholls has realised that “cash helps them feel in control”. Budgeting is easier where money can be counted, “and not just for themselves but also with their children,” she says.

While some banks and startups are sincere in their efforts, Nicholls says, financial inclusion is more often than not a buzzword banks use to appease policymakers.

The actual reason why banks are pushing the cashless society? Simply put, they want to know what you’re buying, and when. “We're moving to a data-driven financial system,” says Nicholls, a shift that’s also being catalysed by Open Banking. “Seventy percent of people don't realise that free apps use their data to make money – and banks and other financial companies, following so many companies in the digital economy, already benefit from informational power over customers.”

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There are, in Scott’s view, two kinds of worries about financial surveillance: surveillance by the state and surveillance by companies. “It's the companies that want to get data on you. But they form the pool of data that then a state would be able to access.” In 2014, the government brought in powers to freeze the assets and close the accounts of people it believed were in the UK illegally. Banks are now required to carry out immigration checks, with grave implications for the estimated 60 per cent of London’s homeless from other countries.

Cash may be dirty, but anyone can use it. From where Natalie is standing, it looks like harder times lie head. “A lot of people will just say that they don't have any money, and they'll stop and give cigarettes, and give food," she says. "Even people that do stop and give you money they're always like, ‘I'm sorry it can't be more.’”

And then there’s the quiet ones. “Some people will give you like a fiver, tenner, maybe even twenty pounds sometimes. To be honest, they're the ones that don't really say anything – they'll literally just hand it to you, and then they just walk off.”